If You’re Relying On The Signature Of Two Officers, You May Want To Think Again
It is widely assumed that if a contract, note or other instrument is signed by a corporation’s president and its secretary, it will not be invalidated as to the corporation by any lack of authority of the signing officers. After all, Section 313 of the California Corporations Code provides: Subject to the provisions of subdivision (a) of Section 208, any note, Read more...
But Wait, California May Require Even More In Annual Reports To Shareholders
Yesterday’s blog discussed California’s requirement that many domestic and foreign corporations send financial statements to their shareholders. If a corporation has 100 or more holders of record (determined in accordance with Section 605), then the annual report must also provide a brief description of the following: Any transaction during the previous fiscal year involving an amount in excess of $40,000 to which the Read more...
California Requires Many Foreign Corporations To Send Annual Financial Statements To Shareholders
California is a net exporter of corporate charters, but it remains home to many corporations. As a result, the California Corporations Code has a preternatural concern with foreign corporations. One example is Section 1501(a) which requires the board to cause an annual report to be sent to shareholders. This report must include a balance sheet as of year end and Read more...
No Directors, No Officers, No Employees And No Agents – Now What?
Occasionally, a corporation may find itself with no directors and no management. Yet, the corporation does not cease to exist. One might wonder what use can there be in a corporation deprived of head and limb. In Melendrez v. Superior Court, 2013 Cal. App. LEXIS 343 (April 30, 2013), the corporation was maintained as a shell through which personal injury Read more...
The California Taxpayer and Shareholder Protection Act of 2003
Ten years ago, there was concern about so-called “expatriate corporations”. These were corporations that incorporated in foreign jurisdictions to minimize their tax liability. In reaction to this phenomenon, the legislature added The California Taxpayer and Shareholder Protection Act of 2003 to the Public Contract Code. 2003 Cal. Stats. ch. 657. In general, this act prohibits a state agency from contracting with Read more...
Political Spending Disclosure Bill Set For First Committee Hearing Today
In January, I wrote about Senator Noreen Evans bill, SB 121, that would require any corporation (as defined) that has shareholders located in California and that makes a contribution or expenditure (as defined): to issue a report on the political expenditures of the corporation in the previous fiscal year, and to notify shareholders not less than 24 hours prior to Read more...
Are Political Contributions Ultra Vires?
It’s been three years, but the Supreme Court’s decision in Citizens United v. Federal Election Comm’n, 558 US 50 (2010) continues to foment a fierce debate about corporate political spending. In February, Representative Adam Schiff of California introduced a resolution, H.J. Res. 31, to amend the Constitution as follows: Nothing in this Constitution shall be construed to forbid Congress or the States from imposing Read more...
Like Elmer Gantry, Supreme Court Breathes New Life Into Revivals
The state, of course, likes to see corporations pay their taxes. When a corporation fails to do so, “the corporate powers, rights and privileges of a domestic taxpayer may be suspended, and the exercise of the corporate powers, rights, and privileges of a foreign taxpayer in this state may be forfeited”. Cal. Rev. & Tax. Code, § 23301. When a Read more...
Directors May Be Invested With Super Powers In Nevada But Not California
Directors With Super Powers Sometimes investors would like to endow one or more directors with greater voting powers. This is possible with a Nevada corporation by virtue of NRS 78.330(3) which provides “ The articles of incorporation may provide that the voting power of individual directors or classes of directors may be greater than or less than that of any other individual directors or classes of Read more...
Court Extends California Whistleblower Protection To Third Party Violations
In California, employees who blow the whistle are protected from retaliation by Labor Code § 1102.5(b) which provides: “An employer may not retaliate against an employee for disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation or noncompliance with Read more...
